BlackRock Income and Growth Investment Trust Plc - Portfolio Update
June 21 2019 - 10:12AM
PR Newswire (US)
BLACKROCK INCOME AND GROWTH
INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) |
All information is at 31 May 2019
and unaudited. |
|
Performance at month end with net
income reinvested |
|
One
Month |
Three
Months |
One
Year |
Three
Years |
Five
Years |
Since
1 April
2012 |
Sterling |
|
|
|
|
|
|
Share price |
-4.8% |
0.8% |
-4.5% |
15.6% |
31.7% |
82.1% |
Net asset value |
-2.5% |
2.9% |
-4.7% |
19.7% |
36.3% |
75.3% |
FTSE All-Share Total Return |
-3.0% |
2.3% |
-3.2% |
28.4% |
29.3% |
70.2% |
|
|
|
|
|
|
|
Source: BlackRock |
|
|
|
|
|
|
BlackRock took over the investment
management of the Company with effect from 1 April 2012. |
At month end |
|
Sterling: |
|
Net asset value - capital only: |
193.81p |
Net asset value - cum income*: |
198.56p |
Share price: |
188.00p |
Total assets (including
income): |
£49.8m |
Discount to cum-income NAV: |
5.3% |
Gearing: |
2.5% |
Net yield**: |
3.7% |
Ordinary shares in issue***: |
23,085,371 |
Gearing range (as a % of net
assets) |
0-20% |
Ongoing charges****: |
1.1% |
* includes net revenue of 4.75 pence
per share |
** The Company’s yield based on
dividends announced in the last 12 months as at the date of the
release of this announcement is 3.7% and includes the 2018 final
dividend of 4.40p per share declared on 20 December 2018 and paid
to shareholders on 19 March 2019 and the 2018 interim dividend of
2.50p per share declared on 25 June 2018 and paid to shareholders
on 3 September 2018. |
*** excludes 9,848,561 shares held
in treasury |
**** Calculated as a percentage of
average net assets and using expenses, excluding performance fees
and interest costs for the year ended 31 October 2018. |
|
|
Sector Analysis |
Total assets
(%) |
Oil & Gas Producers |
11.7 |
Life Insurance |
8.1 |
Pharmaceuticals &
Biotechnology |
8.0 |
Banks |
7.7 |
Household Goods & Home
Construction |
6.9 |
Media |
6.5 |
Financial Services |
6.5 |
Food Producers |
6.0 |
Support Services |
5.9 |
Tobacco |
4.4 |
Food & Drug Retailers |
3.5 |
Travel & Leisure |
3.3 |
Mining |
3.2 |
Industrial Engineering |
2.6 |
Nonlife Insurance |
2.6 |
Gas, Water & Multiutilities |
1.9 |
Mobile Telecommunications |
1.5 |
Electronic & Electrical
Equipment |
1.4 |
Construction & Materials |
1.1 |
Chemicals |
0.9 |
Personal Goods |
0.6 |
|
|
|
|
Net Current Assets |
5.7 |
|
------ |
Total |
100.0 |
|
====== |
|
|
Ten Largest Equity
Investments |
|
Company |
Total assets
(%) |
Royal Dutch Shell 'B' |
6.8 |
RELX |
4.8 |
AstraZeneca |
4.1 |
Prudential |
4.0 |
GlaxoSmithKline |
3.9 |
BP Group |
3.7 |
British American Tobacco |
3.7 |
Tesco |
3.5 |
BHP |
3.3 |
Reckitt Benckiser |
3.2 |
Commenting on the markets, Adam
Avigdori and David Goldman representing the Investment Manager
noted:
|
|
After a period of four consecutive
months of positive returns, the UK market fell 3% during May.
Year-to-date the FTSE All-Share Index remains in positive territory
up 9%. Equity markets globally sold off during the month on the
back of growing concerns over the outlook for global growth and
increasing US/China trade tensions. Economic data was broadly
disappointing. The US manufacturing sector recorded its slowest
activity level in nearly a decade and new orders fell for the first
time since August 2009, and in Europe growth in the manufacturing
sector was slower than expected. Central bank policy meeting
minutes showed European Central Bank policymakers were concerned
about weaker-than-expected growth in the Eurozone, while their
peers at the Federal Reserve were adhering to their view that the
below-target inflation was “transitory”. In the UK Prime Minister
Theresa May announced that she will step down as leader of the
Conservative Party on 7 June 2019. While the move was widely
expected, this was yet another development that adds further
uncertainty to Brexit negotiations and the outlook for the UK. The
UK is scheduled to leave the EU on 31 October, therefore the next
PM will have a tight window to make key decisions, with a wide
range of outcomes. Defensive areas of the market performed well
during the month as did the Oil & Gas sector on the back of a
rally in the oil price, while Telecomms and Industrials
underperformed. Despite ongoing Brexit related uncertainty small
and mid-caps outperformed large caps during the month. |
|
Over the month the Company delivered
a return of -2.5%, outperforming the FTSE All-Share which delivered
a return of -3.0%. |
|
Our holding in RELX was
the largest contributor to performance during the month. Against a
backdrop of increasing concerns around global growth and trade
tensions, investors sought shelter in more defensive businesses,
seeking to benefit from the defensive characteristics of their
earnings. Shares in Whitbread recovered in May after their
downgrade in the prior month citing weakness in end demand.
Corporate activity was the key driver behind the share recovery as
company management indicated it is attempting to buy back shares up
to 25% of Whitbread’s issued share capital as part of its second
phase of the capital return programme. Homeserve, a home emergency
repairs business, had a positive trading statement update boosting
its shares during the month. It reported that group revenue
exceeded £1bn, with North America once again their best performing
region. |
|
EasyJet reported a £275m loss in the
first half of its financial year, citing rising costs per seat due
to fuel price rises, currency and underlying cost inflation, as
well as the impact of drones at Gatwick in December 2018. The
company maintained profit guidance for the second half of the year,
despite the challenging trading environment, while the shares are
also trading at an attractive valuation relative to fleet value. It
was a choppy month for shares in Prudential which ended the month
lower on no specific corporate news flow but seemingly impacted by
the month’s volatility. Tesco shares declined through the month,
and while it had news flow stating their banking operations under
Tesco Bank would cease new mortgage lending, this only had a small
impact on its shares. |
|
During the month we added to
positions including GlaxoSmithKline and HSBC. We have reduced
exposure to Lloyds and Tesco. |
|
We expect nominal growth to remain
modest as we see structural pressures from demographics, corporate
underinvestment and new technology continuing to act as a drag on
inflation. The dovish tilt from central banks has been supportive
for markets, however this is a fragile equilibrium such that we
expect markets to oscillate between periodically worrying about a
deterioration in growth and shifts in interest rate policies from
central banks. With heightened political uncertainty and
investor nervousness, we expect volatility to return to markets. As
active managers of a concentrated fund, we believe that this market
environment continues to provide us with the opportunity to find
high quality, cash generative businesses, with robust balance
sheets, that can deliver long term capital and income growth for
our clients. |
|
We continue to like cash generative
consumer staple companies, especially those exposed to the emerging
market consumer given the prevalent demographic trends in certain
markets. These companies often generate substantial cash flow which
allows them to invest in innovation, marketing and distribution to
ensure the longevity of their brands while also paying attractive
and growing dividends to shareholders. We have also sought exposure
to infrastructure spend whilst at the same time we are watching for
signs of overheating in the US and monitoring economic growth in
China. We also note that inflationary pressures are starting
to build and therefore we seek those companies with sufficient
pricing power and efficiency potential to withstand rising costs.
As the recent past has demonstrated, it is crucial to be selective
and to focus on those companies that are strong operators, that
provide a differentiated service or product and that boast a strong
balance sheet. |
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21 June 2019 |
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